I just want to add that deferring income tax liability can be beneficial even if you aren't expecting your future income tax rate to be lower than at present.
Let's revisit the scenario I laid out above, but with one major difference: all of your income is taxed at 25%, both regular and capital gains income, now and in the future.
The tax loss harvester will still sell her shares for $17,000, and will still save 25% on her taxes this year. She then has shares with cost basis of $17,750 that she sells for $35,500. This represents a $17,750 capital gain, which creates a $4,437.50 tax bill. The tax loss harvester is left with $31,062.50 after selling her shares and paying her tax.
The investor who didn't harvest losses ends up with shares worth $34,000 and cost basis of $20,000, for a capital gain of $14,000. The tax on this gain would be $3,500, leaving this investor with $30,500 after taxes.
As you can see, even without favorable tax rates, the investor who harvested losses when she had an opportunity ends up with 1.8% more money after taxes than the investor who didn't. The real number would actually be a bit higher because that $750 of tax savings that was reinvested would pay dividends, which would compound over time and increase the advantage of harvesting losses a bit further.